The country is on the verge of an explosive growth in new multinational companies (MNCs) and will top the emerging economies, which includes Russia, Brazil and South Korea. This forecast was made by a report released by PricewaterhouseCoopers on Thursday. The report predicts that India would overtake China, the present leader in the category with 141 new MNCs in 2009, by the year 2018.
The key reasons attributed to this change are Indian economy’s rising investment intensity and openness, when compared to China. The report ‘The Emerging Multinationals’ estimates at least 2,200 Indian companies would establish global presence in the next 15 years. And, this would lead to India and China accounting for 42% of new MNCs for the period. By 2024, India will be having 20% more new MNCs than China.
Even as emerging economies gain importance in the post-recessive world, the report points to developing new trends regarding the expansion plans of MNCs. Yael Selfin, head of macro consulting, PwC, explained further, “More new multinationals are moving straight into developed economies as opposed to setting up their first foreign operation in a neighboring emerging economy. These new multinationals are increasingly likely to be in business services or higher value-add manufacturing sectors as opposed to the more basic natural resource extraction sectors.”
The report says that this development could have serious repercussions for companies offering B2B services such as telecommunications and ITeS. Establishing new offices and manufacturing facilities will lead to growth in demand for local services and infrastructure by new MNCs.
The report was prepared using econometric methods to estimate the number of new MNCs for the next 15 years from a representative sample of emerging economies.
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